Once execution of a cheque is admitted, presumptions under Sections 118 and 139 of the NI Act apply, and the burden shifts to the accused to rebut. Mere allegation of the complainant’s financial incapacity, without evidence, is insufficient to rebut the presumption
Case Note
Sanjabij Tari v. Kishore S. Borcar & Anr.
Criminal Appeal No. 1755 of 2010, Supreme Court of India, decided on 25 September 2025
Coram: Manmohan, J. and N.V. Anjaria, J.
Headnote:
Negotiable Instruments Act, 1881 – Sections 138, 118, 139 – Dishonour of cheque – Presumption of legally enforceable debt arises once execution/signature of cheque admitted – Burden on accused to rebut – Mere plea of financial incapacity of complainant insufficient without evidence – Revisional jurisdiction cannot upset concurrent factual findings absent perversity – Guidelines issued for expeditious trial and settlement of cheque dishonour cases – Compounding framework revised to encourage early settlement.
Facts:
The complainant alleged that the accused, his friend, borrowed ₹6,00,000 and issued a cheque which was dishonoured. The trial court convicted the accused under Section 138 of the NI Act, and the sessions court upheld the conviction. However, the High Court of Bombay (Goa Bench) in 2009 acquitted the accused in revision, questioning the complainant’s financial capacity. The complainant appealed to the Supreme Court.
Held:
- Once execution of a cheque is admitted, presumptions under Sections 118 and 139 of the NI Act apply, and the burden shifts to the accused to rebut.
- Mere allegation of the complainant’s financial incapacity, without evidence, is insufficient to rebut the presumption.
- Failure of the accused to reply to the statutory notice strengthens the complainant’s case.
- The High Court, in revisional jurisdiction, erred in disturbing concurrent factual findings of the trial and sessions courts.
- The defence of issuing a “blank cheque” for securing a bank loan was found “unbelievable.”
- Considering the massive pendency of cheque dishonour cases (almost 50% of trial court dockets in some jurisdictions), the Court laid down comprehensive guidelines for faster service of summons (including digital modes), early online settlement mechanisms, standardised complaint formats, dashboard monitoring, and realistic pecuniary jurisdiction for evening courts.
- The Court modified earlier compounding guidelines (Damodar S. Prabhu) by reducing costs for early settlement and scaling costs for later stages (up to 10% at the Supreme Court level).
Conclusion:
The Supreme Court restored the conviction of the accused, directing payment of ₹7.5 lakh in instalments. Broader systemic directions were issued to reduce backlog, streamline cheque dishonour litigation, and reinforce trust in cheques as a financial instrument.
Endnotes (Case Law Cited):
- Rangappa v. Sri Mohan, (2010) 11 SCC 441.
- Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54.
- Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197.
- APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers, (2020) 12 SCC 724.
- Rajaram v. Maruthachalam, (2023) 16 SCC 125.
- Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC 735.
- MMTC Ltd. v. Medchl Chemicals & Pharma (P) Ltd., (2002) 1 SCC 234.
- Southern Sales & Services v. Sauermilch Design and Handels GMBH, (2008) 14 SCC 457.
- Indian Bank Association v. Union of India, (2014) 5 SCC 590.
- Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663.
- In Re: Expeditious Trial of Cases under Section 138 of NI Act, (2021) 16 SCC 116.
- P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd., (2021) 6 SCC 258.
- Gian Chand Garg v. Harpal Singh, Criminal Appeal No. 3789/2025 (SC, 11 Aug 2025).
- Chellammal v. State, 2025 SCC OnLine SC 870.
- Rajesh Agarwal v. State, 2010 SCC OnLine Del 2511.
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